CBS, Viacom Form ViacomCBS, Merging to Combat Netflix and YouTube
In a long awaited announcement, CBS and Viacom announced today that they will merge into one company, or perhaps recombine since they were one company until splitting up in 2006. The company will now be called ViacomCBS, led by Viacom CEO Bob Bakish. Both companies are owned by Sumner Redstone's National Amusements. Shari Redstone, his daughter, is vice chairman on both company's boards, and pushed for the merger for years. Her efforts had been blocked by former CBS CEO Leslie Moonves and the CBS board. Following the merger, she will chair the combined company. The deal was structured as a cash-free transaction called a stock swap, with CBS shareholders owning roughly 60% of the new company.
The merger follows on the heels of other media megamergers in recent years, including AT&T acquiring Time Warner and the Walt Disney Company taking 21st Century Fox. ViacomCBS owns a vast number of media properties, including CBS, Showtime, Nickelodeon, MTV, and the CW. Streaming video properties include CBS All Access and Pluto TV, which Viacom acquired for $340 million in March 2019.
Staying competitive with other major media companies is one reason for the transaction, but an even larger one is competing with digital behemoths Netflix and YouTube. In a statement, both companies said they will accelerate their streaming plans and reach out to new global markets. Bakish outlined a three-part digital strategy to the New York Times, which includes selling more digital subscriptions, elevating digital ad sales, and creating streaming originals for other platforms.
"The streaming wars haven’t even started! This merger is another step in the 'alignment of the troops' toward the big battle," says Gideon Gilboa, senior vice president for product and marketing, media, and telecom at Kaltura. "Last year there were more streaming services closing down than new ones launching and to us this means things are now getting serious. Streaming is the new TV and only those players with enough scale, great content, and the right platform will prevail.
"Who will win the war is still too early to say but this merger creates another potential powerhouse for streaming services. ViacomCBS will now be better positioned for the primary race to own the consumer experience while creating opportunities along the way to maximize traditional TV distribution monetization channels through a bigger and better catalog of content."
ViacomCBS chief digital officer Marc DeBevoise says CBS All Access has brought churn down to single digits and seen a 60% growth in subscribers.
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